Some housing bubble news from Wall Street and Washington. Associated Press, "Fremont General Corp. said Tuesday it received default notices on about $3.15 billion of loans it sold in March 2007. The bank received notices from two investors who purchased the loans, saying it violated sales terms when its tangible net worth fell below $250 million."

"Fremont was forced by its regulator in early 2007 to stop originating mortgages because it was not operating with proper risk-management oversight. The company proceeded to sell its mortgage assets after the lending operations were closed."

From Bloomberg. "Bank of Montreal, Canada's fourth- biggest bank, reported...trading losses and writedowns on debt tied to the U.S. subprime mortgage market. The bank had pretax writedowns and losses of C$548 million as the value of its debt investments declined."

"ICICI Bank Ltd., India's second- largest bank, reported $264 million of costs to write down the value of overseas investments, the biggest loss disclosed by an Indian bank since the collapse of the U.S. subprime-loan market."

"The value of the subprime-related investments in its $2 billion of overseas assets dropped because investors are shunning all except the safest securities, said Chanda Kochhar, ICICI joint managing director."

"PMI Group Inc., the California-based insurer, said losses from U.S. mortgage insurance totaled about $236 million in the fourth quarter."

From Reuters. "The Pasadena, California-based parent of IndyMac Bank said the delinquency rate on prime loans rose to 6.85 percent from 3.83 percent in last year's first quarter. It said subprime mortgage delinquencies rose to 28.18 percent from 18.55 percent a year earlier, and late payments on home equity loans rose to 16.35 percent from 5.78 percent."

"IndyMac also said the rate of loans in foreclosure was 3.02 percent in January, up from December's 2.65 percent and 0.88 percent in the year-earlier quarter. Meanwhile, January loan volume totaled $2.9 billion, down 33 percent from December and 66 percent from January 2007."

"IndyMac long specialized in 'Alt-A' home loans, which often go to people who cannot fully document income or assets."

"Federal Reserve Chairman Ben Bernanke called Tuesday for additional action to prevent more distressed homeowners from falling into foreclosure. One of the suggestions was for mortgage and other financial companies to reduce the amount of the loan to provide relief to a struggling owner."

"Bernanke acknowledged this idea might be a tough sell to lenders. Lenders, he said, are reluctant to write down principal. 'They say that if they were to write down the principal and house prices were to fall further, they could feel pressured to write down principal again,' Bernanke said."

"To date, permanent home mortgage modifications that have occurred have typically involved a reduction in the interest rate, while reductions of the principal balance of the loan have been quite rare, he said. 'Measures that lead to a sustainable outcome are to be preferred to temporary palliatives, which may only put off foreclosure and perhaps increase its ultimate costs,' Bernanke said."

"Any new rules to improve governance of U.S. banks must not increase the already high regulatory burden on this industry, Federal Reserve Chairman Ben Bernanke said on Tuesday."

"'Banking is certainly one of the most regulated industries in the world,' Bernanke told the national convention of the Independent Community Bankers of America."

"The Bush administration will release within weeks proposals that address deficiencies in the regulation and functioning of U.S. financial markets, Treasury Secretary Henry Paulson said."

"'We're looking at the mortgage-origination process, we're looking at the securitization process, we're looking at rating agencies, we're looking at disclosure issues, we're looking at capital issues and regulatory issues,' he said in an interview today with Bloomberg Television."

"Paulson said in the interview that 'almost too much' has been made out of concerns about homeowners whose house prices have dropped below their mortgages. He said borrowers who can pay their loans should do so regardless of whether the home value is 'under water,' he said. Otherwise, 'you're a speculator,' he said."

The New York Times. "According to the data from Hope Now, lenders completed 'loan workouts' for 638,000 troubled subprime borrowers from July through the end of January. But about two-thirds of the people who received any help were put on repayment plans that simply allowed them to catch up on missed payments and back interest."

"Mr. Paulson acknowledged that mortgage lenders and mortgage-servicing companies were not moving as rapidly on loan modifications as he would have liked."

"'Am I satisfied? No,' he said. 'Am I surprised? Not really.'"

Dow Jones Newswires. "Fannie Mae and Freddie Mac reached an agreement with New York Attorney General Andrew Cuomo to only purchase loans that meet new standards designed to ensure independent, reliable appraisals."

"'With this agreement, Fannie Mae and Freddie Mac have become leaders in transforming the mortgage industry,' Cuomo said in a statement Monday. 'Now national banks have a clear choice: Immediately adopt the new code and clean up appraisal fraud in the mortgage industry or stop doing business with Fannie Mae and Freddie Mac - it is that simple.'"

"'We believe that the appraisals were often fraudulent because there were conflicts of interest and pressures on the appraisers,' Cuomo said at a press conference, referring to the alleged improper activity his probe uncovered."

From Newsday. "Under the new code announced Monday, lenders won't be able to use in-house and affiliated appraisers and mortgage brokers won't be able to select the appraiser if they want Fannie or Freddie to buy their loans."

"The two government-sponsored agencies buy about 80 percent of the nation's home loans and package them for sale to Wall Street, freeing up lenders to make more loans."

"'It's going to make it more difficult for brokers to do what they're supposed to do, which is help the consumers,' said Richard Biondi, incoming president for the New York Association of Mortgage Brokers."

"Brian Clarke, chief financial officer for Bethpage Federal Credit Union, said the clear winners are Fannie and Freddie, who in theory would be buying less risky loans. But the impact of the new standards will depend on the extent of appraisal fraud in the industry, he said."

"'This could deflate housing prices a bit, but it depends on how much of this is going on,' Clarke said. 'That's the question and that's a hard one.'"

The Sun Sentinel. "CEO Ken Lewis of Bank of America, the nation's largest bank, which will also become the largest U.S. home lender later this year when it completes its $4.1 billion acquisition of troubled Countrywide Financial Corp. Lewis spoke recently with Paul Owers of the South Florida Sun-Sentinel."

"Q: Will you discuss the effect of subprime lending on the banking and housing industries? A: It's been devastating to the capital markets even more than the housing market. Subprime loans get packaged with securities, and that's caused massive losses around the world."

"Q: Will you allow Countrywide to continue in the subprime business? A: They have stopped all subprime loans and have stopped buying subprime loans from brokers. That would be the model under which we would operate."

"Q: How will the mortgage industry be different now that the housing boom has ended? A: It'll be a much simpler world. We're not going to see as many complex loans because there are no takers."

The Palm Beach Post. "Karen Weaver, a managing director at Deutsche Bank, painted a bleak picture in her speech to the National Association for Business Economics convention. She predicted recovery would take years, that sharply lower home prices are 'unavoidable' and that foreclosures will continue at a 'pretty heavy level for the next 15 months or so.'"

"Weaver displayed charts showing that after the last housing downturn in the early 1990s, home prices in certain markets did not return to their peaks for six, eight or even 11 years."

From Business New Haven. "Members of the New Haven Mayor's task force on subprime lending have said they may recommend that the city sue lenders over surging foreclosures."

"Three task force members told a group that they are considering filing a class-action against major lenders who made high-interest loans, the New Haven Independent reported. Connecticut homeowners hold 71,000 subprime mortgages worth about $15 billion, with as many as 8 percent of loans seriously delinquent."

The Boston Channel. "The chief economist for the National Association of Realtors offered a ray of sunshine to his New England members."

"'The worst in the sub-prime foreclosures is probably peaking at this point, but most of the mortgages -- 90 percent of the homeowners -- are not exposed to sub-prime loans. A vast number of neighborhoods are doing fine,' said Lawrence Yun, of the National Association of Realtors."

"'I am very encouraged, as a matter of fact. I think he had a lot of good messages for all of us as Realtors in the region,' Duxbury Realtor Georgia Taft said."

"'We are in the middle of a five-year downturn, so if we are at the bottom, we are going to start coming up. That is great,' Orleans Realtor Linda Collins said."

"In fact, Yun predicted that most of New England will see home prices stabilizing and possibly seeing a modest increase. 'By 2009, I think we will be back to normal. In that case, people can anticipate a 4 percent to 6 percent price appreciation,' Yun said."

"Dorchester homeowner Michelle Anthony, however, does not live in one of those neighborhoods, so she is getting help from the Neighborhood Assistance Cooperation."

"'First, I got separated from my husband, so I am in the middle of a divorce. Then on top of that, I got laid off in January,' said Anthony, who is on the verge of losing her home."

"The worst news was her sub-prime mortgage rate. Within three years, her monthly payment doubled to just less than $3,000 per month. 'It didn't look like it was getting any better to me. A lot of people are in the same situation that I am in,' Anthony said."